Richard E. & Elizabeth S. Nilsen - Page 3




                                        - 3 -                                         

          Between the years 1964 and 1982, petitioner invested money with             
          Mr. Sheets approximately two or three times per year.  Petitioner           
          experienced a favorable rate of financial success with Mr.                  
          Sheets' investment suggestions, which consisted primarily of real           
          estate investments such as land development.                                
               During 1982, Mr. Sheets approached petitioner about                    
          investing in Blythe II, which was being promoted as an                      
          agricultural research and development partnership.  Blythe II was           
          the first agricultural type investment opportunity that had been            
          proposed by Mr. Sheets for consideration by petitioner.  Mr.                
          Sheets provided petitioner with a fairly voluminous private                 
          placement memorandum2 (the offering), which described the                   
          proposed investment in, and the activities to be conducted                  
          through, Blythe II.  Petitioner admittedly only scanned the                 
          document and did not carefully read each page.  Instead,                    
          petitioner passed along the offering to his certified public                
          accountant, Gary Mathis (Mr. Mathis), who routinely reviewed                
          petitioner's other investment opportunities.  After perusing the            
          offering, Mr. Mathis advised petitioner that Blythe II appeared             
          to be a reasonable investment opportunity and that petitioner               
          should be entitled to deductions for research and development               
          costs, as well as other partnership expenses.                               


               2    The private placement memorandum consisted of some 47             
          pages, plus 8 exhibits, and a table of contents.                            





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011